Timely voluntary disclosure and compliance with filing and payment obligations can prevent far-reaching measures by the tax authorities.

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Non-compliant behavior by taxpayers is being dealt with increasingly rigorously by the Tax Authorities. Recently, several entrepreneurs were summoned to appear before the Court of First Instance due to non-compliant behavior and substantial outstanding amounts owed to the Tax Authorities. Taxpayers with significant outstanding debts face a greater risk of imprisonment. With this approach, the Tax Authorities aim to send a signal that structural non-compliance with filing and payment obligations will not go unpunished.

Introduction

Failure to comply with tax filing and payment obligations can have serious consequences. To help prevent such undesirable situations, the Tax Authorities have recently offered rental property owners the opportunity to voluntarily disclose previously unreported rental income.

Filing obligation

Taxpayers have a legal obligation to file a tax return. This means they are required to submit an accurate and complete return within a deadline set by the Tax Authorities. In addition to the obligation to submit a timely, accurate, and complete tax return, the tax due must also be paid within the deadline set by the Tax Authorities.

Non-compliance consequences

When a taxpayer does not comply with the filing deadline, this is considered a default. In such cases, the Tax Authorities may impose a default penalty. A default also arises if the tax due is not paid on time. This results in collection interest on the outstanding amount and a penalty for late payment. If the payment is nevertheless not made, the Tax Authorities may proceed with enforced collection measures, such as garnishing wages, freezing bank accounts, or seizing assets. In cases of structural or intentional noncompliance, such as deliberately failing to file tax returns or submitting incorrect information, taxpayers may not only face substantial fines and additional tax assessments, but also criminal prosecution. In such situations, taxpayers risk significant financial penalties or even imprisonment. Recent cases show that the higher the amount of tax due, the greater the risk of receiving a custodial sentence.

Voluntary disclosure scheme

According to the voluntary disclosure scheme, the taxpayer must, on their own initiative, correct inaccuracies or omissions in their tax return, information, data or indications, before they know or reasonably should suspect that the Tax Authorities are or will become aware of the inaccuracy or omission. The voluntary disclosure period is limited to the five-year reassessment period. However, in cases of willful misconduct, the reassessment period may be extended to ten years. Article 26 General National Ordinance on Taxes (in Dutch: “Algemene Landsverordening Landsbelastingen”) further provides that if voluntary disclosure occurs, instead of an intentional penalty (vergrijpboete), an administrative penalty (verzuimboete) of no more than 15% of the tax amount due will be imposed. Timely voluntary disclosure eliminates the element of intent, thereby preventing the imposition of a penalty for intentional noncompliance or criminal prosecution.

The voluntary correction must therefore occur before the taxpayer knows or reasonably should suspect that the Tax Authorities are or will become aware of the issue. Correction is, in any case, not considered voluntary if the Tax Authorities have announced a tax audit or a sector or fraud investigation is ongoing or has been announced, and the taxpayer can reasonably suspect that the results of such an investigation may affect them.

Voluntary disclosure scheme for undeclared rental income

On July 18, 2025, the Tax Authorities announced a temporary voluntary disclosure scheme for owners of real estate. We refer you to our Tax Facts dated July 21, 2025, in which we provided a detailed explanation of the temporary scheme. The temporary disclosure scheme is intended for individuals who have generated income from renting out residential properties, whether for short-term or long-term lease, but have not (fully) reported this income in their income tax returns. If the rental income for the year 2024 is fully reported in the 2024 income tax return, and this return is filed before September 30, 2025, the Tax Authorities will not impose any additional tax assessments or penalties for previous years up to and including 2023.

Conclusion

• If you have not filed your tax returns yet and/or still have outstanding debts with the Tax Authorities, consider submitting the necessary returns and settle any outstanding tax liabilities as soon as possible to avoid severe measures.

• Proactively communicating with the Tax Authorities and making use of available arrangements (such as voluntary disclosure schemes) can help prevent serious consequences.

Keep in touch

Our team of seasoned tax practitioners can assist you in evaluating how this tax arrangement affects your specific situation.

Should you have any questions regarding this announcement, please do not hesitate to contact us. Our team would be more than happy to assist you with your questions.